Tag Archive for: Taiwan

Stronger deterrence will avoid war over Taiwan

Xi Jinping is positioning the People’s Liberation Army to bring Taiwan under the control of the Chinese Communist Party. The Taiwanese assess perhaps a three-year time frame before an attack, while US Indo-Pacific Command in Honolulu considers a military assault in six years to be possible.

If conflict breaks out, it will be large-scale and bloody. It will throw the world into two hostile camps—in effect, the democracies versus the authoritarian regimes. War over Taiwan will inevitably involve Australia.

There will be no positive outcomes from a conflict. If China is defeated, Xi will fall from office and the CCP will face an existential crisis of legitimacy that could see it lose its hold on power amid large-scale political turmoil.

If Beijing wins, it will have to deal with a bloody occupation on an island of 25 million people who mostly reject the idea of communist control. The Taiwanese will put up tough resistance. Xi will face his own Iraq occupation moment, with nothing to offer Taiwan other than repression.

Beijing’s control of Taiwan would transform the balance of power in the Indo-Pacific. Japan would become vulnerable from the south and east, and face the reality that China could cut its trade and energy supplies.

It’s hard to see how the US’s Pacific alliances could survive a defeat like the communist takeover of Taiwan. Everything depends on how the situation plays out. Imagine a US administration that decides that war over Taiwan, contrary to all American statements, isn’t worth fighting.

If that happens, America’s allies in the region, Australia included, will know they are on their own when it comes to dealing with a militarily successful Beijing. In this world the choice for Japan, Australia and South Korea is to either appease Beijing or develop much stronger military capability at breakneck pace.

Imagine another scenario where America does indeed choose to come to the defence of Taiwan. Australia will get the president’s second phone call after he or she has rung Tokyo, asking what military support we will offer. Does anyone imagine Australia has a realistic option to sit out the fight? If we tried to opt out, we can say goodbye to ANZUS, intelligence cooperation, nuclear-propelled submarines, US foreign investment and all the other things that have made us wealthy and secure.

It’s claimed Pentagon desktop war games invariably see the US lose against the PLA over Taiwan. That doesn’t necessarily mean much. But to be clear, a US defeat and a resurgent China would be a disaster for the interests of countries that don’t want to bow to Beijing.

All this means war over Taiwan is an outcome that must be avoided. Xi has built up such a momentum towards war, and such aggressive and nationalistic expectations among the Chinese people, that I believe the only way to prevent a war is to change Xi’s calculation of the risk and costs of starting a conflict.

Internationally, Xi has been a successful risk-taker. He staged a takeover of the South China Sea and militarised reclaimed ‘island’ bases with no effective international response; he has prosecuted wholesale cyber intellectual property theft around the world with, until recently, most countries reluctant to even name China as the cause; he trashed Beijing’s agreement with the UK over Hong Kong and is rolling out repressive rule over its 7.5 million people. The world responded with empty hand-wringing.

China continues to prosecute a campaign of economic coercion against Australia where our fellow democracies have been happy to fill the export niches we once enjoyed. We are asked by China’s supporters in Australia to believe it’s our fault because we provocatively wanted to investigate the origins of Covid-19.

Through all of this, Xi has learned that being audacious and taking risks has worked. He has gotten away with international aggression, internal repression and the Covid-19 cover-up with hardly a scratch. Xi will apply a similar calculation of cost and risk to Taiwan. Large-scale military incursions into Taiwan’s air defence identification zone, the ramped-up propaganda about the inevitability of ‘reunification’ and the attempts to squeeze Taiwan out of any international engagement are all aimed at testing how far Xi can move without receiving pushback.

It is a certainty that PLA air incursions will continue, get larger and get closer to Taiwan’s landmass. In a major speech last week, Xi returned to the old formulation of calling for the ‘peaceful reunification’ of Taiwan, but there is no doubting his sense of urgency. Xi wants to be the leader that delivers this outcome and not leave it to his successors.

We can prevent this looming catastrophe by making it clear to Xi that the democracies will not tolerate China’s forced incorporation of Taiwan. An emergency meeting of the G20 should be held to make an unambiguous commitment to its security.

Australia should accept Taiwan’s offer to exchange intelligence and security assessments as it does with our Quad partners, Japan, India and the US. We should post a Defence liaison to our mission in Taipei and invite a counterpart to Canberra. Our hardline reading of the ‘one China’ policy meant that, as a senior Defence official, I couldn’t talk with Taiwanese counterparts. We run the risk that we could be asked to defend Taiwan without ever having discussed the task with the Taiwanese military.

Most importantly, the US, Japan and Australia need to make explicit our intention to work together to protect Taiwan and to afford Taipei more opportunities to have its voice heard in international forums. More Australian leaders should follow Malcolm Turnbull and Tony Abbott and engage with Taiwan, strengthening political and economic ties.

Beijing will not welcome this, but we know the price of Xi’s approval is compliance to his wishes. Xi needs to understand the world will not look the other way while the PLA attacks Taiwan.

It’s clear Beijing won’t give up its aspiration for unification with Taiwan, but if Xi realises the costs of such military folly will be too high, the hope is he will leave that to future generations. Deterrence secures the peace, whereas appeasement will surely lead to war.

Saving Taiwan

China’s coercive expansionism may be taking its most dangerous turn yet. Recently, record-breaking numbers of Chinese military planes have entered Taiwan’s air defence identification zone, where the island’s authorities assert the right to demand that aircraft identify themselves. China’s muscle-flexing sends a clear message: it is serious about incorporating the island—and ‘reunifying’ China—potentially by force.

Though the international community has been reluctant to challenge the Chinese claim that Taiwan has ‘always been’ part of China, the claim is dubious, at best, and based on revisionist history. For most of its history, Taiwan was inhabited by non-Chinese peoples—Malayo-Polynesian tribes—and had no relationship with China. Geographically, Taiwan is closer to the Philippines than to the Chinese mainland.

It was not until the 17th century that significant numbers of Chinese began to migrate to Taiwan, encouraged by the island’s Dutch colonial rulers, who needed workers. Over the next 100 years, the ethnic Chinese population grew to outnumber Taiwanese natives, who were increasingly dispossessed, often violently. During this period, Taiwan came under the Qing Dynasty’s control. But it was not until 1887 that Taiwan was declared a province of China.

Barely eight years later, China ceded Taiwan to Japan in perpetuity, following its defeat in the Sino-Japanese War. Taiwan remained under Japanese colonial rule until 1945—Japan officially renounced its sovereignty over it in the 1951 San Francisco Peace Treaty—and has been self-governing ever since. In other words, for the past 126 years, Taiwan has been outside China’s lawful control.

Today, Taiwan has all the attributes of a robust independent state, and most Taiwanese want it to stay that way. But Chinese President Xi Jinping appears eager to annex the island, as Mao Zedong’s regime did to Tibet in the early 1950s, in the name of ‘reunification’. A Chinese invasion of Taiwan would constitute the biggest threat to world peace in a generation.

Beyond compromising freedom of navigation in a crucial region, a Chinese takeover of Taiwan would upend the balance of power in the Indo-Pacific, not least by enabling China to break out of the ‘first island chain’ that runs from the Japanese archipelago, through Taiwan and the Philippines, and on to Borneo, enclosing China’s coastal seas. It would also irreparably damage America’s reputation as a reliable ally. If the United States cannot (or will not) prevent Taiwan’s subjugation, why should anyone else count on US protection?

The risks are particularly acute for Japan, whose southernmost islands are adjacent to Taiwan. As then deputy prime minister Taro Aso observed in July, ‘Okinawa could be next.’ Unable to rely on the Americans, Japan would likely remilitarise and even acquire nuclear weapons. Other US allies—such as South Korea, the Philippines and Thailand—would likely be brought into China’s sphere of influence.

Yet the US doesn’t seem particularly committed to preventing a Chinese takeover of Taiwan and the subsequent collapse of the half-century-old Asian security order. This is exactly what Xi is counting on. Successive US administrations have let him get away with countless expansionist manoeuvres—from militarising the South China Sea to demolishing Hong Kong’s autonomy—as well as cultural genocide in Xinjiang. Why should Taiwan be any different?

US President Joe Biden’s recent shift to a more conciliatory approach towards China has probably bolstered Xi’s confidence further. Xi may now be focused on China’s 17-month-long military confrontation with India in the Himalayas, where Chinese territorial encroachments have triggered a massive buildup of forces along the inhospitable frontier. But, if some resolution can be found that reduces tensions in the Himalayas, it would free up Chinese capabilities to deal with the fallout of any Taiwan-related operation.

At that point, the only thing that would deter China from attempting to recolonise Taiwan would be the knowledge that it would incur high concrete—not just reputational—costs. Biden must therefore make it crystal clear to Xi that the US would mobilise its own military resources to defend Taiwan.

But will he? The ‘US strategic framework for the Indo-Pacific’—a policy document declassified by President Donald Trump’s administration before leaving office—recommends that America help Taiwan develop ‘asymmetric’ capabilities against China. Such a strategy has recently been backed by some former American government and military officials. As retired Admiral James Stavridis puts it, just as a porcupine’s quills protect it from larger predators by making it difficult to digest, weapons like anti-ship and anti-aircraft missiles would turn any invasion of Taiwan into a bloody, protracted and costly guerrilla campaign.

It is true that bolstering Taiwan’s defences is crucial to avert Chinese amphibious and airborne operations. But even if the US and Taiwanese governments reached an agreement on an asymmetric strategy, it would take several years to build a ‘porcupine Taiwan’ capable of choking the Chinese dragon. That process would include training a large civilian corps to mount sustained guerrilla attacks on invaders.

Until then, in keeping with the central paradox of deterrence, the only way to discourage aggression by a revisionist power is for the status quo power to threaten to go to war. That is how the US kept West Berlin—which had a political status even more precarious than Taiwan’s—free throughout the Cold War.

The worst stance the US could take would be to oppose a Chinese takeover of Taiwan without credibly signalling a genuine willingness to defend the island militarily. Such an approach could encourage Xi, who has grown accustomed to acting with impunity, to order a surprise invasion. With that, the Indo-Pacific order would be overturned, dealing a mortal blow to America’s global pre-eminence.

What if …? Economic consequences for Australia of a US–China conflict over Taiwan

The possibility of a military conflict between China and the US over Taiwan is receiving greater attention from both military strategists and political leaders, but there has been little focus on the likely economic consequences.

A new ASPI report examines the implications for the Australian economy should its trade with China be severed in the event of a conflict. It shows there would be widespread loss of employment, along with consumer and business shortages that could only be managed with rationing.

While mining and agriculture would bear the brunt of the loss of export markets, the loss of China’s imports would cause severe disruption to the retail, construction and manufacturing industries.

A conflict between the two most powerful nations, which would inevitably also draw in the US network of allies, would strike a massive blow to the global economy and would be accompanied by financial turbulence. The loss of Australia’s bilateral trade with China would be just one element in the economic fall-out; however, the analysis exposes particular Australian vulnerabilities.

Australia is much more dependent on China than China is on us. China’s share of Australia’s goods exports reached a peak of 47% in May 2020, before the Chinese authorities began imposing trade embargoes.

Australia’s share of China’s exports, by contrast, is just 2%. China’s trade is highly diversified: apart from the US and Japan, no country takes more than 4% of its exports.

Australia is more important as a supplier to China, accounting for 7% of its imports of goods. This ranks Australia ahead of both the US and Germany in the importance of its goods trade to the Chinese economy and only slightly below the share of China’s goods imports provided by South Korea (9%) and Japan (8%).

Australia’s exports of iron ore and liquefied natural gas are crucial inputs to Chinese industry, but we’re also an important supplier of goods across the spectrum of mineral resources, agricultural products and food. However, the importance of China’s supplies to Australia is far greater still. China accounts for just under a third of Australia’s goods imports.

The intensity of Australia’s trade relationship with China is recent and grew suddenly in the wake of the global financial crisis. In late 2008, China’s share of Australia’s goods exports was just 13%, far below that of Japan, which had just peaked at 29%.

By 2015, China was taking 30% of our exports. Strong commodity prices lifted China’s share of our exports above 40% by 2019.

China’s role as a supplier to the Australian economy also rose rapidly. It overtook the US as Australia’s largest single source of goods imports in 2007, and its share of our imports rose from 15% in 2008 to 20% by 2016 and 30% by 2020. This is double its share of world trade.

While Australia’s exports to China are heavily concentrated in a few key sectors, the most striking features of China’s exports to Australia are their broad spread across a wide range of industries and the dominant share they hold.

According to the UN statistics agency, Comtrade, Australia imports 100 different goods from China with sales of at least $100 million and 1,603 different goods with annual shipments worth at least $2 million. By contrast, we export 42 goods to China with annual sales of at least $100 million and 291 goods with sales of more than $2 million.

For many of those imports, China holds a large share of world trade. A shutdown of Australia’s trade with China would cut essential supplies for businesses, which they would have difficulty replacing in the midst of a crisis.

The UN data shows that China holds at least half of Australia’s import market for more than 40% of the huge range of products for which it has annual sales in Australia of more than $2 million.

The loss of a supplier with a market share of 50% or more would leave most businesses struggling to find adequate replacements. In markets in which China accounts for half of Australia’s imports and also holds at least 40% of world trade, Australia’s supplies would clearly be vulnerable.

China holds a dominant share for 68 of the top 100 goods it ships to Australia, while it controls at least 40% of the world market for 27 of those goods.

Iron ore is Australia’s only export that represents a strategic vulnerability for China. China has vast low-quality iron ore reserves of its own and as recently as 2014 was producing 1.5 billion tonnes of ore.

China’s output dropped by more than a third over the six subsequent years, as Chinese mills preferred higher quality Australian and Brazilian ores, enabling lower air pollution and greater operating efficiency. In a conflict, China would revert to domestic low-quality ore. It would take time for it to bring mothballed domestic iron ore mines back into operation and total steel production would fall.

The report’s central recommendation is that the federal government should make the diversification of Australia’s trade a priority. Australia has accumulated an impressive array of bilateral and regional trade agreements over the past eight years, but, with the exception of the agreement with China, there’s been little follow-up.

Since the Abbott government sealed its free trade agreements with Japan and South Korea in 2014, our imports from Japan have risen by only 25%, while our purchases from South Korea have fallen by 2.3%. Imports from Singapore, with which Australia has had a free trade agreement since 2003, fell by 17% between 2014 and 2019 (pre-Covid), while imports from New Zealand were down by 1%. Our imports from China rose by 52% in that period, highlighting its success in winning market share. Our exports to other free trade partners have also shown little growth, while sales to China have soared.

The federal government should appoint an assistant trade minister charged with trade promotion and actively pursue trade missions with free trade agreement partners. It should back that drive with real resources. In a radical break with past practice, the government’s trade promotion should include imports as well as exports.

The government should work with business to improve understanding of the need for diverse supply lines and markets. Government can learn from the effectiveness of the quiet work undertaken by the Critical Infrastructure Centre with the operators of infrastructure assets to improve their resilience to disruption.

Policy, Guns and Money: Taiwan, climate change and the cost of defence

Recently, national security debates in the United States and Australia have been heavily focused on the possibility of conflict in the Taiwan Strait. The Strategist’s Anastasia Kapetas is joined by Ryan Hass, senior fellow at the Brookings Institution, to discuss the credibility of this narrative. They talk about the likelihood of conflict over Taiwan and how Taiwan can counter China’s actions.

Robert Glasser, head of ASPI’s Climate and Security Policy Centre, is joined by Natasha Kassam, director of the public opinion and foreign policy program at the Lowy Institute, to discuss the 2021 release of Lowy’s annual climate poll, which gauges Australians’ attitudes to climate change.

ASPI’s annual Cost of defence report breaks down the funding and expenditure of the Department of Defence, examining key areas of growth, acquisition spending and investment. Report author Marcus Hellyer discusses some of the trends highlighted in this year’s report with Peter Jennings, and the increasing financial concern around Defence’s external workforce.

How Australia can help Taiwan tackle global issues

One of the difficult things about being Taiwan is the lack of normal government-to-government interaction. Taiwan is diplomatically recognised  by only 15 countries, so it is dealt with informally in most of its international interactions. That rankles.

Taiwan actively campaigns for more international space. Last month saw Taiwan’s continuing push for observer status at the World Health Assembly—something Australia supports, along with the United States, the G7 and more than 50 countries overall. Taiwan launched a high-profile campaign #LetTaiwanHelp ahead of the meeting of the World Health Assembly, arguing that it has much to share on world health and should not be excluded.

But Taiwan also seeks space in lower profile ways. In May, Australia was part of a little-discussed initiative, the Global Cooperation and Training Framework (GCTF). You won’t find anything about it on the Department of Foreign Affairs and Trade Taiwan web page, or that of the Australian Office in Taiwan, but Australia is quietly supporting a mechanism designed to give Taiwan more opportunities for international engagement.

The GCTF was established in 2015 by the US and Taiwan, with Japan joining in 2019. Its mission is to provide a platform to harness Taiwan’s strengths and expertise to address global issues of mutual concern. It provides an avenue for Taiwan’s world-class experts to share their knowledge, which is not otherwise possible because many international institutions don’t allow Taiwan to participate.

Since it was established, the GCTF has held more than 30 international workshops involving 68 countries and 1,600 government officials and experts. It holds meetings on themes like public health, women’s empowerment, law enforcement, media literacy, energy efficiency, cybersecurity and disaster relief.

For ordinary countries, that’s no big deal, as they regularly join such meetings, either in regional groups such as ASEAN, or in cross-regional groups like the G20.  But for Taiwan it’s an opportunity that’s otherwise denied. In the GCTF Taiwan can share its knowledge and expertise from a position of equality with other participants—and sidestep its limited diplomatic status. This year, for the first time, the UK and the European Union have co-hosted events.

Australia co-hosted two GCTF meetings in May: one on money-laundering, an area where Taiwan is seen as a policy leader, and the other on the Covid-19 vaccine rollout—a topic of concern in both Australia and Taiwan. Discussions covered vaccine safety, distribution, logistics, cold-chain management, priority lists, adverse reactions and vaccine hesitancy. About 135 experts from 36 countries tuned in.

Earlier meetings hosted by Australia included workshops on energy governance, pandemic-related crime and a prescient meeting on maintaining vigilance against further waves of Covid-19 infection.

In the words of Taiwanese Foreign Minister Joseph Wu, the GCTF provides an excellent sharing platform for Taiwan to demonstrate that ‘it is willing and able to contribute to ensuring a better future for mankind’. Less altruistically, it also provides a forum to promote Taiwan’s foreign policy messages, such as in a workshop on defending democracy from disinformation. And it helps Taiwan reach specific target audiences, such as in the Pacific.

There’s been discussion recently of Australia’s policy towards Taiwan and what we should and shouldn’t do if we want to show our support. Continuing participation in the Global Cooperation and Training Framework is a practical way for Australia to deliver on its statements in support of Taiwan’s international participation and role in the Indo-Pacific.

Australia’s ‘China debate’: Time to end domestic politicking and focus on Xi’s destabilising words and actions

Shadow foreign minister Penny Wong has criticised the government over public discussion of the potential for a war with China starting over Taiwan, characterising it as the government seeking domestic political advantage.

Even though Wong’s speech at a Canberra book launch included protestations of structural bipartisanship, it’s a risky and unfortunate path to take at a time when Australia desperately needs a cohesive national policy on China.

It’s been hugely valuable for Australia that the big decisions that have protected Australian interests in managing the now obvious risks in our engagement with China have been backed by both sides of politics. They include:

  • Excluding ‘high-risk’ vendors from the 5G network,
  • strengthening foreign investment review from a national security perspective,
  • requiring transparency of funding sources and relationships with foreign powers from those involved in public debate and political influence,
  • standing against Xi Jinping’s mass-scale human rights abuses in Xinjiang and Hong Kong, plus his open militarisation of the South China Sea after committing not to do so in 2015, and
  • ending Victoria’s participation in the Belt and Road Initiative.

Parliament has also been strongly behind resisting China’s economic coercion of Australia in multiple trade sectors—so far affecting barley, wheat, coal, wine, lobsters and lumber, and now also including suspension of the ministerial-level strategic economic dialogue.

This clarity in parliament has helped Australia to be resilient as we continue the hard long-term work of reducing the importance of the China market to Australia, and so reducing Beijing’s coercive leverage.

And it’s not just the government and opposition that support this policy direction, it’s the majority of the Australian public, as shown by last year’s Lowy poll, which is in line with a much broader international collapse in populations’ views of China under Xi.

The idea that discussion of a potential conflict between China and other nations—including the US and allies like Australia—if Beijing uses its military to seek to unify Taiwan with the mainland by force is all about domestic politics, though, is wrong.

It’s wrong because this line of thinking ignores some basic realities.

Xi has changed the Chinese government’s longstanding policy that Taiwan is an issue to be resolved ‘by future generations’, and has instead said that Taiwan now is a problem that should not be passed down from one generation to the next.

Last year, he called on the People’s Liberation Army to focus on preparing for war and visited numerous military units. One was the PLA’s marine corps, which has a primary role of conducting amphibious assaults against islands. He exhorted them to prepare for war and to focus on being able to use force against Taiwan. In January, he issued a mobilisation order requiring the entire armed forces to ‘focus on war preparedness and to be primed to fight at any second’.

Xi has continued the PLA modernisation program, which has a first priority on building the PLA to take Taiwan by force.

He also ended the only credible path to a peaceful unification between Taiwan and the mainland when he ended the ‘one country, two systems’ model in Hong Kong—the only viable model that Taiwanese people might have considered for peaceful unification.

And incursions by PLA ships and aircraft across the mid-point of the Taiwan Strait and into Taiwanese airspace are at record levels in 2021, even against the high benchmark of the past four years.

These same reasons are why Taiwan’s security has been on the agenda for multiple international meetings—like the US–China meeting in Alaska, the latest US–Japan meeting and this month’s G7 foreign ministers’ meeting.

This combination of actions by Xi and the PLA make it entirely reasonable—and necessary—to be open with the Australian people about the risks of conflict. In a calm, sober and measured way, certainly, but calmness doesn’t mean lack of clarity or silence.

We also hear that mentioning the very idea of conflict plays into Beijing’s hands. However, not naming a problem always complicates solving it. So not discussing the risk of conflict in light of Beijing’s actions will simply make acting to deter Beijing much harder.

Deterring Xi from taking another big risk—as he did over Hong Kong—requires cooperative multilateral planning and actions to demonstrate the costs to China from seeking to change Taiwan’s status by force.

We should not turn this grave international situation into a domestic political issue that divides parliament on partisan lines.

The good news here is that Wong’s speech committed to the structural elements of Australia’s China policy set out above. And it’s also refreshing that Wong recognises, unlike numerous former political figures, that the policy that worked for decades can’t work with the China we now have under Xi.

The bad news is this ‘structural bipartisanship’ is wrapped in Labor’s own domestic political strategy. From Wong’s speech, this includes attacking Prime Minister Scott Morrison over former US President Donald Trump, policy on Jerusalem and, on China, both the prime minister’s recent confusion around ‘one country, two systems’, and, repeatedly, over words used by Home Affairs Secretary Mike Pezzullo to staff in an Anzac Day message.

Real bipartisanship on China policy is needed from both sides of politics to avoid creating seams for a strategically focused Chinese state to exploit.

Under Trump, the US reasserted support for Taiwan through commitments made when Washington recognised the People’s Republic of China and sought closer government-to-government and other contact with Taiwan under the Taiwan Relations Act. Since taking office, President Joe Biden has continued this.

The US stepped up the military arms it was selling to Taiwan under Trump and this is likely to continue under Biden.

There is indeed, as Wong says, a debate about the US ending its policy of ambiguity on whether it would necessarily act militarily to defend Taiwan if China attacked it—but that debate is driven by whether the current situation requires even more clarity about US commitments to preserve Taiwan’s current status.

The key US military commander who would deal with a Taiwan conflict, Indo-Pacific Command chief Admiral Philip Davidson, has sought urgent funding from Congress to increase the US military’s deterrent power. He has testified to Congress about his concern that the PLA is getting increasingly confident in its ability to seize Taiwan by force.

There’s little doubt that the US understands the strategic interests at stake in defending Taiwan and providing very credible deterrence to prevent Xi from ordering the PLA to act. The Biden administration has reiterated the US core position that Taiwan’s status should not be changed by force. That’s Australia’s (and many other nations’) longstanding policy too. It’s just not true that somehow Australian policy is out in front of allies and partners.

If the current domestic politicking is simply electoral positioning, then we must press leaders on both sides of politics—and at state and territory levels—to realise that there are more important national interests at stake that must trump these narrower political interests. And, after realising this, they must all speak accordingly.

More structural policy agreement and articulation is in all our interests, as is more clarity about Chinese policies and directions, instead of fevered domestic political introspection. That’s pretty clearly what the population expects at this difficult time in Australia’s history.

Semiconductors as a shield for Taiwan?

What keeps Taiwan independent? Ambiguous alliances and regular weapons purchases have so far acted as a powerful deterrent to Beijing’s desire to finally annex Taiwan into the People’s Republic of China.

But Taiwan has another tool in its arsenal—and it’s one that could make the PRC continue to hesitate to use coercive force and that could help persuade the United States to intervene if Beijing tried to invade Taiwan.

As emerging and critical technologies like 5G and the internet of things become more essential to state power, the development and production of the microprocessor chips that lie at the heart of high-tech products have become more important.

Enter Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip foundry, which is now a big part of the Taiwan flashpoint between China and the US. Much like the products it produces, TSMC has more than just commercial significance for Taiwan. Access to these chips will determine states’ security capabilities over the coming decades as artificial intelligence is expected to reshape the military landscape.

The factors that prompted former US president Donald Trump to escalate a trade war with China, which his successor Joe Biden has inherited, include China’s history of unfair trade practices, exploitation of World Trade Organization principles, and notorious reputation for intellectual property theft, particularly in critical and emerging technologies.

Cross-strait tensions have also increased as Beijing continues to pressure Taipei with military threats, prompting concerns that a crisis may erupt soon. The motivations of the US and its allies to ensure Taiwan remains independent are fuelled at least in part by the need to prevent a potential global economic crisis because of the critical place TSMC has in the global supply chain of microprocessors.

Washington has justifiable concerns about Beijing’s desire to dominate this prime technology area after seeing China’s increasing ambitions to build its capabilities and set global standards.

In a period of intensifying strategic competition, Washington can’t afford to allow Beijing to exploit technological dominance in a way that jeopardises the security of the US and its allies.

When TSMC was founded in 1987, Taiwan’s National Development Fund provided around NT$2.2 billion after the company struggled to find investors. TSMC has also benefited from the government’s provision of affordable energy. The Ministry of Economic Affairs has not only subsidised the whole semiconductor industry, but also specifically ensured TSMC has stable and sufficient supplies.

And with the Taiwanese government’s success in controlling Covid-19, TSMC has been able to provide advanced chips without interruption. It has even managed to grow its earnings while most of the rest of the world’s economy has nosedived due to the pandemic.

Despite the significant role TSMC plays in US–China trade tensions, its importance is far beyond one coveted business entity. A recent executive order from Biden has highlighted how vital semiconductor chips are to the US and its allies. Chinese control of such a key element in the technological supply chain would be a national security concern for any country that China decided to oppose, especially the US.

The cost of losing TSMC to China would be difficult to bear economically as well as strategically. Foreign investors and foreign institutions hold around 78% of the company’s shares, so cascading effects in the global stock market would be unavoidable if war were to occur.

TSMC is far ahead of other foundry competitors. Chinese control of TSMC would turn the company into a significant bargaining chip and give Beijing much greater influence in the rare-earth minerals market.

TSMC clients such as Apple, Nvidia, Qualcomm and Advanced Micro Devices would be severely impacted, along with equipment vendors, including ASML, Applied Material and KLA-Tencor.

Companies in countries like Japan and Germany would likely be dragged into any turmoil involving TSMC, especially in light of recent requests to Taiwan to help alleviate a shortage of chips.

China has invested heavily in its own chip-production industry through the Semiconductor Manufacturing International Corporation, but it is still in its nascent stage. Not only is the company incapable of competing with TSMC in the near future, but it also still relies on it.

If China expects a significant breakthrough in its foundry industry, military coercion is a dangerous option, and it could backfire. TSMC would crucially benefit China in its competition with the US, making it one of the key factors that would drive a US response.

It’s unlikely Beijing will invade Taiwan to end the prolonged dispute over how many ‘Chinas’ there are if it also had to consider the cost of damaging the semiconductor supply chain it still relies on from Taiwan.

Taiwan has been preparing for a possible invasion since 1949 and it wouldn’t be an easy task for the People’s Liberation Army to pull off. A war would be costly in Taiwanese lives and infrastructure. The importance of TSMC as a major player in a critical global supply chain for both China and the US should give both sides pause for thought as tensions rise, because both would stand to lose.

Taiwan’s cabinet reshuffle a response to China’s ‘unrestricted warfare’

Last month, Taiwan’s government announced several personnel changes in leadership positions in its defence and security team, including the key posts of defence minister and National Security Bureau director.

While at least one of these changes had been months in the making, the fact that several occurred concurrently, and were announced just after the Chinese New Year break, has prompted conjecture that certain recent developments have prompted a shift in the island’s strategic thinking.

Many suspect that the changes were in response to the election of Joe Biden as US president, who some Taiwanese politicians believe won’t be as staunch in his support of Taipei as President Donald Trump was. Perhaps unsurprisingly, some opposition politicians have strengthened their calls for the independence-leaning government of President Tsai Ing-wen, which has thus far adopted a hardline position towards the mainland, to now adopt a more conciliatory stance towards Beijing.

But that’s just one way to look at it. An alternative theory is that the reshuffle reflects the administration’s attempts to confront the growing challenges posed by China’s model of ‘unrestricted warfare’, which replaces a narrow focus on kinetic warfare with a wider array of options, including ‘grey zone’ tactics, lawfare, political warfare and economic leverage.

To understand why this may be the case, it’s useful to examine the personnel changes in more detail.

First, the selection of Chiu Kuo-cheng as the new defence minister represents an anomaly. Prior to assuming this role, Chiu was serving as the director of the National Security Bureau. Given the breadth of his expertise and contacts in the intelligence community, local analysts assume Chiu will set a new precedent for the role of defence minister by concomitantly managing defence affairs and coordinating with NSB sources to exercise direct oversight of the Military Intelligence Bureau.

Until now, these roles had been strictly segregated. The reason for this was a longstanding fear that a minister with direct access to both defence and national security intelligence resources would effectively have monopoly control over all the intelligence resources that reach the president. Presidents on both sides of the political divide have preferred to have the freedom to draw on a wide variety of sources and viewpoints, which places them in a better position to exercise executive discretion.

Why, then, was Chiu chosen? A plausible reason is that China’s ‘unrestricted warfare’ model has confounded the conventional dichotomy between kinetic and information warfare. And if grey-zone activity, rather than outright invasion, is China’s preferred approach to achieving ‘reunification’, Taiwan’s defence strategies, and not only its tactics, will need to be more immediately responsive to up-to-the-minute intelligence and analyses. Put another way, the defence of the island perhaps no longer entails simply determining the when and where of an invasion, but requires an evolving and dynamic understanding of what counts as warfare, and how it may be prosecuted.

For example, some Taiwanese analysts contend that the ever-growing frequency of People’s Liberation Army Air Force flyovers of Taiwanese airspace is aimed at weakening the island’s defences through attrition (for example, by forcing Taiwan’s smaller number of jets into maintenance or increasing the accident rate due to pilot fatigue). However, if Taiwan limited its responses to incursions to mitigate this problem—as reportedly recommended by US military figures—it could cede de facto control of patches of airspace to Beijing. That could be a precursor to an extension of the Chinese air defence identification zone deeper into the island’s territory, and possibly even lead to the PLAAF expelling Republic of China Air Force assets from their own airspace. This is but one example of how up-to-the-minute access to multiple intelligence sources could mitigate the risk of tactical victories morphing into strategic blunders.

A similar appraisal can be made of the ascension of Chen Ming-tong to the position of head of the NSB. Chen is an ‘old China hand’ who had shifted directly from a position of minister of the Mainland Affairs Council. This shift, when added to the fact that Chen doesn’t have a military or intelligence background, makes his selection highly unconventional.

Why, then, would someone like Chen be chosen? One explanation is that a recent challenge for the NSB has been not only finding threats to Taiwan’s sovereignty, but identifying and defining them. There are growing concerns over issues like media ownership, foreign investment, political lobbying, disinformation campaigns, and even unmanned drone use. Such is the anxiety at the new threats Beijing poses that Taipei has adopted firm measures some have criticised as draconian, including the five national security laws and the Anti-Infiltration Act.

The advantage of bringing a ‘China hand’ into a leadership position in the NSB under these circumstances is that, while he may know less about how to gather intelligence on threats, he will probably know more about how those who devise them think, and where such threats may be found.

These convention-defying changes could be viewed as part of the Tsai administration’s second, and perhaps more profound, wave of defence reforms. The first reform, the adoption of the overall defence concept, marked the shift to an asymmetric doctrine that belatedly acknowledged and adapted to the loss of the balance of power across the Taiwan Strait. However, the core of that strategy still revolved around recognising the centrality of the ‘invasion scenario’ in defence thinking.

To the extent that the new personnel changes mark a response to China’s ‘unrestricted warfare’ model, they perhaps reflect a transformation from Taiwan’s defence brass preparing for the war they fear to adapting to the new types of warfare that are already being waged.

While it remains to be seen how these changes will pan out, the concept of realigning defence and intelligence to prioritise those threats and scenarios China prefers appears, in theory at least, to be the right approach for the tiny island to better marshal its limited resources. It should also offer food for thought for other nations in the region and Taiwan’s more distant middle-power allies.

The US and its allies must ensure Taiwan doesn’t fall to Beijing

There are growing signs that a military crisis could erupt across the Taiwan Strait this year as China flexes its military muscle to strongarm Taipei into accepting unification.

ASPI’s Peter Jennings notes that Beijing is also seeking to test the mettle of the new US administration.

It’s vital that the United States stand firm against any Chinese provocation. A failure to defend Taiwan would be an abdication of US international leadership. It would seriously damage America’s credibility in the Indo-Pacific and would invite China and others to become ever more aggressive. Thankfully, all indications suggest that President Joe Biden is set to continue strengthening Washington’s relationship with Taipei.

Jennings argues that it’s equally important for Australia to stand with the US in any Taiwan Strait crisis. If China decides that military adventurism, timed to exploit the ongoing Covid-19 pandemic and political turmoil in the US, is a way to further its goal of ending America’s strategic primacy in the Indo-Pacific, the worst thing Australia could do is look the other way.

Principles matter. As Australia enjoys all the benefits of a free and open society in a stable and functioning democracy, our principles and values must extend to supporting the survival of Taiwan as a vibrant democracy of 24 million people with a successful market economy. The examples of Hong Kong and Xinjiang suggest a dark future for the Taiwanese people if China decides to force unification with the mainland.

Taipei’s success provides a powerful alternative to Beijing’s promotion of authoritarianism with Chinese characteristics as a model for development. Ideological competition is intensifying as Xi Jinping pushes for a Chinese-led ‘community of common destiny’ as a basis for the future global order. It’s just as vital for Western democracies to win this new ideological battle as it was for us to resist Soviet communism during the Cold War. To turn away from a fellow democracy under threat from an aggressive authoritarian neighbour would make a mockery of the values we advocate and lower our credibility in the eyes of many developing countries.

China has a geostrategic agenda that goes beyond forcing unification on the Taiwanese people. Taiwan is a means to a Beijing-dominated regional order that would dramatically worsen our strategic outlook.

A Chinese-controlled Taiwan would ease the challenges for Beijing in projecting naval power across the Indo-Pacific and weaken the ability of the US to maintain a forward presence in the western Pacific. From ports and air bases in Taiwan, the People’s Liberation Army could support the extension of its maritime militia and coast guard northwards through the Ryukyu Islands and against the Senkaku Islands. That would make it more difficult for Japan to protect its southern islands and give Beijing added coercive leverage against Tokyo in a crisis, including by interfering with Japan’s maritime commerce.

From Taiwan, the PLA could also pivot south, effectively enveloping the Philippines and giving Beijing easier access to the resource-rich Benham Rise. China has already sent oceanographic vessels there and challenged Manila’s sovereignty over those waters. Chinese control of Taiwan would also strengthen Beijing’s ability to control the South China Sea by blocking the Luzon Strait and the Balintang and Babuyan channels, cutting off the traditional access paths used by US naval vessels.

Control of Taiwan would make it easier for the PLA to reach Guam using long-range missiles and airpower, extending its anti-access capabilities beyond the first island chain. It would also enable the PLA to operate Type 096 ballistic-missile submarines further out into the middle sea between the first and second island chains, bringing more of the US within reach of JL-3 nuclear-armed submarine-launched ballistic missiles.

Taiwanese strategic analyst Eli Huang argued in 2017 that China had big plans for regional dominance extending well beyond the Taiwan Strait. Its development of large aircraft carriers and advanced aviation vessels for amphibious operations reinforces a power-projection capability that is increasing. Access to forward bases, whether through direct military conquest, such as the seizure of Taiwan and the militarisation of the South China Sea, or by exploiting its Belt and Road Initiative to gain access to commercial ports that could support Chinese naval vessels, would further extend that reach.

If China were to provoke a crisis over Taiwan, whether this year or in a future year, some would no doubt argue that it’s not Australia’s business and that supporting a US response would increase the risk of devastating Chinese military, political and economic retaliation against us. To accept that argument as policy would mark the end of our strategic alliance with the US, leaving us more exposed to Chinese coercive pressure and political warfare, or even a direct military threat.

As Kim Beazley stated in 2020:

Australia cannot be defended without the alliance with the United States. It’s as simple as that. If you know the math. If you know the capability. And if you know what we can actually spend—and I’d still say that at 2.3% of GDP—to contemplate a situation without them, you can forget it.

The loss of the US alliance would be catastrophic for our security, and a hegemonic China with grand imperial ambitions would force us to confront an ugly strategic choice. Acting alone, we’d need  significant boosts to our defence spending to achieve a degree of self-sufficiency beyond the traditional levels of ‘self-reliance’ that past defence white papers have alluded to. That could include developing military capabilities normally not considered for our defence force to deter a nuclear-armed adversary. We may well see an intensification of the political and economic pressure Beijing applied to Australia for much of 2020.

A military crisis across the Taiwan Strait would be a serious test of our national resolve, the strength of our most vital strategic relationship and our commitment to the values we stand for. The outcome of such a crisis would shape the strategic environment of the Indo-Pacific region for decades.

Trump administration’s move to ease Taiwan restrictions a test for Biden

On 9 January, US Secretary of State Mike Pompeo rescinded a range of restrictions on US government interaction with the government of Taiwan. These restrictions had been in place, with periodic revisions, since the US established diplomatic relations with the People’s Republic of China in 1979. They proscribed certain meeting places (such as the White House and the State Department), precluded official attendance at Taiwan’s national day events on 10 October, required correspondence to pass through the US representative organisation the American Institute in Taiwan, barred the use of certain words (such as ‘government’ and ‘country’) to refer to Taiwan, and so on.

The circumstances of the late 1970s and early 1980s when the rules were established were very different to today’s. Taiwan, or the Republic of China, was still a military dictatorship under the KMT or Chinese Nationalists, whose claims to represent all of China had by then long been anachronistic and illegitimate. There was a generation of American policy leaders who were the architects of rapprochement with Beijing and were committed to Pax Americana in Northeast Asia. Their familiarity with the history and politics of modern China and the narrative of the civil war between the Nationalists under Chiang Kai-shek and the Communists under Mao Zedong meant they believed that peace and unification were coterminous. They had little knowledge of the history of Taiwan, including its Japanese colonial history and the failed 1947 anti-Chinese Nationalist uprising.

Today, Taiwan is democratic and the early movements for self-determination in the 1910s and 1920s under Japan have found party political representation. Beijing under Xi Jinping has sought to challenge the US-led regional order, and its model for unification, such as it is, is more about validating the ideology of the Chinese Communist Party than offering any viable roadmap that wouldn’t tip the region into chaos.

Many of the restrictions on US–Taiwan contacts had slipped by the wayside over the past several years and the Taiwan Assurance Act, which President Donald Trump signed into law in December, required their formal reassessment in any case. Pompeo’s statement was also calibrated, reading: ‘The United States government maintains relationships with unofficial partners around the world, and Taiwan is no exception.’ It stepped up to the boundaries of US–Taiwan relations but in using the word ‘unofficial’ didn’t step over them.

However, while the US move is explainable, it has occurred in the context of the crisis of US democracy and a febrile transition to a new presidency, and after nearly three years under a secretary of state characterised by notably hostile rhetoric towards Beijing. Washington is unstable and that affects the calculation of risk of any action in the Taiwan Strait.

One outcome of the decision is to present an early test for the incoming administration’s position towards Taiwan and China. President-elect Joe Biden could publicly walk back the action to signal a change of China policy or discretely affirm it and sidestep Beijing’s ire by ascribing responsibility to Trump. One can’t discount the partisanship of the outgoing administration wanting to present such a test and forestall the Biden administration’s time to calibrate foreign policy on its own terms.

At the same time, it does create options that the current administration’s unidirectional approach doesn’t have. Indeed, had the US government taken this action earlier, more clearly as part of its wide-ranging push-back against Beijing with months or years of escalation yet to run, it might have led to the most dangerous scenario of all—one in which Beijing concluded that it had run out of time on Taiwan and had to act. This is an indictment of the approach to China by the Trump administration but also a reminder that no US presidency functions separately from the governance structure of the US system and the policy resets presented by its democratic elections.

China’s state media was quick to vent fury at the US, while the Ministry of Foreign Affairs issued a strong but mostly boilerplate repudiation, falling short of some of the more alarmist analyses. In Taipei, the government was in the awkward position of being delighted by the decision but also conscious of the chaos in Washington, a presidency without legitimacy, and the uncertainty over the Biden administration’s position. The Taiwan foreign ministry issued a statement welcoming the decision but also noting the bipartisan support for the Taiwan Assurance Act that was its proximate trigger.

In Australia, the government is very unlikely to change the rules of interaction with Taiwan in response. Like the US, Australia has applied its own norms more flexibly in recent years, but, contrary to the view of a range of vocal commentators, the Australian government hasn’t been slavishly following the Trump administration in foreign policy. Australia–Taiwan relations are in a positive period, but Canberra has still declined to upgrade them with concrete actions despite entreaties from Taipei.

At a press conference in December, Prime Minister Scott Morrison referred to ‘Taiwan’ without a qualifier. However, at another press conference in January, Health Minister Greg Hunt returned to form and used the term ‘the jurisdiction of Taiwan’, a phrase for which no precedent or rule exists but which no doubt satisfied Beijing. Like Beijing and Taipei, Canberra can only observe developments in Washington and wait and see—though, for the Taiwan Strait, that is never the worst outcome.